In recent years crowdfunding has become a pretty big thing. Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the internet.
I’ve never started a crowdfunding project myself but I have a few friends who have found a lot of success using it as a funding method. I’ve also created videos for crowdfunded campaigns. Most crowd funded campaigns have videos that are shared on social media in attempts to find additional backers for the project. A funding goal is set and if the project meets that goal through financial pledges, then the project is funded.
I have supported a wide range of projects at different stages of the crowdfunding process. Here are some examples of projects that did get fully funded:
Camera Equipment – I supported a project for a new design of camera gear from a well established manufacturer. My support would give me one of the new products.- Movie Production – I supported a project to fund an upcoming movie. My support would give me a copy of the movie Blu-ray as well as the soundtrack on CD.
- Book Publishing – I supported a project to fund the publication of a book. My support would give me a copy of the book.
- Household Item – I supported a project that had already been funded and shipping was set to start in a few weeks.
- Audio Equipment – I supported a project for a new type of audio microphone. The item was fully designed and waiting for manufacturer funding.
Each of these projects looked like a slam dunk. I would pay upfront for the project and get the product in return. Supporting the project in this way would support the creator of the project as well as give me the product for a cheaper price than if I waited and purchased the product when it was available on the shelves. What I’ve learned is that things don’t always go as planned.
Lessons Learned
Here are some of the lessons that I’ve learned.
- Items don’t always work as well as you think they will. In the case of the camera equipment above, the prototype seemed to work great in their project video. It could save me time and at the same time, make my videos better. During the production process, decisions had to be made and the product changed slightly here and there resulting in a product that wasn’t all it could be. After receiving the product, I tried and tried to make it work as advertised but ultimately it ended up gathering dust in my garage. I never did use it in a real production.
- Projects aren’t finished on schedule much of the time. I have had to wait longer than expected in most cases. One of the projects I was most excited for still has not started manufacturing and it’s been over a year since it was funded. They’ve had to change their design many times. They’ve had to change manufacturers many times. They also physically moved their offices to another country, all while we are waiting for our finished projects. You’ve got to remember that many of these projects are not started by experienced business professionals. They don’t know what it takes to get items manufactured and shipped. Even the project I supported (number 4 above), that was due to ship within a few weeks last April, still has not shipped.
- Many Projects aren’t funded at all. I can’t tell you how many projects that I’ve backed that ultimately do not get funded. It’s not easy to raise a couple hundred thousand dollars for a new project. You don’t get backers just by putting up a posting. You have to actively sell the product to get the backers necessary.
I’m not saying crowdfunding is not worth it. I love the concept. I love supporting small businesses and entrepreneurs. You just have to realize what you are getting into. I’ve had very successful experiences as well. I have a friend who has funded many projects using crowdfunding. He provides a great product and does it in a timely manner. You just shouldn’t expect that from everybody, every time.